48. The damage which eventuated was subsidence beneath a gas main: a form of risk against which no rational owner of a gas main would fail to insure. The casualty was caused by the escape of water from the council's land. But the source was a perfectly normal item of plumbing. The pipe was, it is true, considerably larger than the ordinary domestic size. But it was smaller than a water main. It was installed to serve the occupiers of the council's high rise flats; not strictly speaking a commercial purpose, but not a private one either.

49. In my opinion the Court of Appeal was right to say that it was not a "non-natural" user of land. I am influenced by two matters. First, there is no evidence that it created a greater risk than is normally associated with domestic or commercial plumbing. True, the pipe was larger. But whether that involved greater risk depends upon its specification. One cannot simply assume that the larger the pipe, the greater the risk of fracture or the greater the quantity of water likely to be discharged. I agree with my noble and learned friend Lord Bingham of Cornhill that the criterion of exceptional risk must be taken seriously and creates a high threshold for a claimant to surmount. Secondly, I think that the risk of damage to property caused by leaking water is one against which most people can and do commonly insure. This is, as I have said, particularly true of Transco, which can be expected to have insured against any form of damage to its pipe. It would be a very strange result if Transco were entitled to recover against the council when it would not have been entitled to recover against the Water Authority for similar damage emanating from its high pressure main.

50. I would therefore dismiss the appeal.

LORD HOBHOUSE OF WOODBOROUGH

My Lords,

51. The importance of this appeal lies in the fact that your Lordships have been asked to review and, if you should think it right to do so, hold not still to be good law what is commonly called 'the rule in Rylands v Fletcher'. It has been attacked as obsolete, unworkable or, more simply, as not being a rule at all. It has been rejected as "heresy" in Scotland: RHM Bakeries (Scotland) Ltd v Strathclyde Regional Council (1985) SC 17 at 41, per Lord Fraser of Tullybelton. It is, for example, no longer used in Australia, having been subsumed into the general law of negligence: Burnie Port Authority v General Jones Pty Ltd (1994) 120 ALR 42. The history of the rule is itself remarkable, from the time of its birth in 1866-8 (LR 1 Ex 265 and LR 3 HL 330) when it was seen as being no more that a statement of the existing law and not an innovation at all (Ross v Fedden (1872) 26 LT 966 per Blackburn J at 968; see also Lord Cairns LC at LR 3 HL 338), through to the present day when it has been affirmed as still being part of the English common law (Cambridge Water Co v Eastern Counties LeatherPlc [1994] 2 AC 264), surviving en route many judgments where it appears to have been misunderstood and therefore treated as incoherent. (eg, See Professor Newark quoted by Lord Goff in Cambridge Water at 297-8)

52. I consider that the rule is, when properly understood, still part of English law and does comprise a useful and soundly based component of the law of tort as an aspect of the law of private nuisance. It derives from the use of land and covers the division of risk as between the owner of the land in question and other landowners. It is not concerned with liability for personal injuries which is covered by other parts of the law of torts (Read v J Lyons & Co Ltd [1947] AC 156) and which does not rise for discussion in this case.

The Rule:

53. As formulated by Blackburn J and approved on appeal, the rule is:

" We think that the true rule of law is, that the person who for his own purposes brings on his land, and collects and keeps there anything likely to do mischief if it escapes, must keep it in at his peril, and, if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape It seems but reasonable and just that the neighbour, who has brought something on his own property which was not naturally there, harmless to others so long as it is confined to his own property, but which he knows to be mischievous if it gets on his neighbour's, should be obliged to make good the damage which ensues if he does not succeed in confining it to his own property. But for his act in bringing it there no mischief could have accrued, and it seems but just that he should at his peril keep it there so that no mischief may accrue, or answer for the natural and anticipated consequences."

54. The salient features of the rule are easily identified: the self interest of the landowner, his conduct in bringing or keeping on his land something dangerous which involves a risk of damaging his neighbours' property, the avoidance of such damage by ensuring that the danger is confined to his own property and liability to his neighbours if he fails to do so, subject to a principle of remoteness. The subsequent complications and misunderstandings have arisen, not from the original rule and its rationale, but from additional criteria, often inappropriately expressed, introduced in later cases.

The Principle:

55. The principle which the rule reflects is also easily apparent. It is that the law of private nuisance recognises that the risk must be born by the person responsible for creating it and failing to control it. It reflects a social and economic utility. The user of one piece of land is always liable to affect the users or owners of other pieces of land. An escape of water originating on the former, or an explosion, may devastate not only the land on which it originates but also adjoining and more distant properties. The damage caused may be very serious indeed both in physical and financial terms. There may be a serious risk that if the user of the land, the use of which creates the risk, does not take active and adequate steps to prevent escape, an escape may occur. The situation is entirely under his control: other landowners have no control. In such a situation, two types of solution might be adopted. One would be to restrict the liberty of the user of the land, the source of the risk, to make such use of his land as he chooses. The other is to impose a strict liability on the landowner for the consequences of his exercising that liberty. The rule adopts the second type of solution as is clear from the language used by Blackburn J and on appeal and was explicit in the statements of Bramwell B at first instance (sic utere tuo ...) and in the later cases cited by my noble and learned friend Lord Hoffmann. It is a coherent principle which accords with justice and with the existing legal theory at the time.

56. This approach was entirely in keeping with the economic and political culture of the 19th Century, laissez faire and an understanding of the concept of risk. During the 20th Century and particularly during the second half, the culture has changed. Government has increasingly intervened to limit the freedom of a landowner to use his land as he chooses, eg through the planning laws, and has regulated or forbidden certain dangerous or antisocial uses of land such as the manufacture or storage of explosives or the emission of noxious effluents. Thus the present state of the law is that some of the situations where the rule in Rylands v Fletcher applies are now also addressed by the first type of solution. But this does not deprive the rule of its utility. The area of regulation is not exhaustive; it does not necessarily give the third party affected an adequate or, even, any say; the Government decision may give priority to some national or military need which it considers must over-ride legitimate individual interests; it will not normally deal with civil liability for damage to property; it does not provide the third party with adequate knowledge and control to evaluate and protect himself from the consequent risk and insurance cost. As Lord Goff pointed out in Cambridge Water (inf), the occasions where Rylands v Fletcher may have to be invoked by a claimant may be reducing but that is not to say that it has ceased to be a valid part of English law. The only way it could be rendered obsolete is by a compulsory strict public liability insurance scheme for all persons using their land for dangerous purposes. However this would simply be to re-enact Rylands v Fletcher in another guise.

57. Rylands v Fletcher was unremarkable in the mid 19th century since there was then nothing peculiar about strict liability. There were many other fields in which strict liability existed, for example conversion. For those following a "common" calling, such as common carriers or common inn-keepers, liability was also strict. Although the origins were already present in the 19th century in the defence of 'inevitable accident' in trespass cases, it was only later that the generalised criterion of negligence was developed, culminating in Donoghue v Stevenson [1932] AC 562. That is a fault - ie, breach of a duty of care - not a risk concept. But, where the situation arises as between landowners and arises from the dangerous use of his land by one of them, the risk concept remains relevant. He who creates the relevant risk and has, to the exclusion of the other, the control of how he uses his land, should bear the risk. It would be unjust to deny the other a risk based remedy and introduce a requirement of proving fault.

58. Three other considerations have been brought into the argument. First, it was already the law that, where the activity creating the danger has been authorised by statute, the question of what, if any, civil liability could arise from engaging in the authorised activity was a question of the construction of the statute. This was a principled approach (though not inevitable) and was not inconsistent with the existence of an unqualified common law rule where no statute was involved. A parallel situation existed where a carrier, who would otherwise have been carrying as a common carrier, had made a 'special contract' with the merchant. But in any event the argument from statute does not assist. Even as recently as 1991 Parliament enacted legislation which expressly recognised the existence of the common law liability and preserved it: Water Industry Act 1991 s.209(1) and (3).

59. Secondly, arguments have been advanced relating to the defences recognised in Rylands v Fletcher as well as in cases following it. These defences were the same as those used elsewhere in the common law in relation to strict liabilities and related to the causal connection between the relevant damage and conduct of the defendant. Thus 'act of God' was always a common law exception. It was metaphorical phrase (like "fate") with a religious origin used to describe those events which involved no human agency and which it was not realistically possible for a human to guard against: an accident which the defendant can show is due to natural causes, directly and exclusively, without human intervention and could not have been prevented by any amount of foresight, pains and care, reasonably to be expected of him (Nugent v Smith (1876) 1 CPD 423; see also The Mostyn [1928] AC 743 explaining River Wear Commissioners v Adamson (1877) LR 2 App Cas 743). Damage done by rats is not an act of God: Dale v Hall (1750) 1 Wils 281. The case of Carstairs v Taylor (1871) LR 6 Exchequer 217 concerned damage done by rats to a gutter-box draining rain water from the roof of a warehouse, part of which was let to the plaintiff and in consequence wetted; but it was decided on consent grounds not on causation (except possibly for Kelly CB); Rylands v Fletcher was treated as distinguishable and therefore not applicable. Act of God is not, and never was, the same as inevitable accident or the absence of negligence as the judgment of the Court of Appeal delivered by Mellish LJ in Nichols v Marsland (1876) 2 Exchequer Division 1 fully explains. The defendant could not have anticipated the exceptional flood which caused her dam to break; no conduct of hers was a proximate cause of the plaintiff's damage. This case was followed, together with its causation reasoning, by this House in Rickards v Lothian [1913] AC 263. On the question of causation, the speech of Lord Moulton has given rise to no problems; it is other aspects of what he has said that have been problematical.

60. Thirdly, it is argued that the risk of property damage is 'insurable', just as is public liability. It is then said that, since insurers are likely to be the real parties behind any litigation, the rule has become unnecessary. This is an unsound argument for a number of reasons. It is historically unsound: in the second half of the 19th century there already existed in England, as the common law judges were well aware, a developed insurance market. The existence of an insurance market does not mean that such insurance is available free of charge: premiums have to be paid. Some risks may only be insurable at prohibitive rates or at rates which for the proposer are not commercially viable and so make the risk, for him, commercially uninsurable. (Indeed, in recent times it has been the experience that some insurers will not cover certain risks at all, eg loss or damage caused by flooding.) The rationale, he who creates the risk must bear the risk, is not altered at all by the existence of an insurance market. It is an application of the same concept, an acknowledgement of risk. The economic burden of insuring against the risk must be borne by he who creates it and has the control of it. Further, the magnitude of the burden will depend upon who ultimately has to bear the loss: the rule provides the answer to this. The argument that insurance makes the rule unnecessary is no more valid than saying that, because some people can afford to and sensibly do take out comprehensive car insurance, no driver should be civilly liable for his negligent driving. It is unprincipled to abrogate for all citizens a legal rule merely because it may be unnecessary as between major corporations.

Implied consent/mutual benefit:

61. It is necessary at this stage to refer to a well established, basic and valuable principle of the law of private nuisance. Whereas (short of statute) there is no public interest defence in the civil law of nuisance, there is a defence of express or implied consent. This was expressly recognised by Blackburn J in Rylands v Fletcher and was, as we have seen, applied in Carstairs v Taylor. It obviously is of relevance where one or more tenants or freeholders are occupying a single building or where neighbours are living in close proximity with each other in an urban environment. The archetypical case is Andreae v Selfridge & Co Ltd [1938] Ch 1, where the disturbance arose from the building work involved in the demolition and rebuilding of the defendants' premises. It was held that the plaintiffs as landowners in central London could not claim in respect of the reasonable incidents of such operations: see also Wildtree Hotels Ltd v Harrow LB [2001] 2 AC 1. This is a principle of reciprocity or mutual benefit or "give and take, live and let live", an expression used as long ago as 1862 by Bramwell B in Bamford v Turnley LR 3 B&S 62 at 84. (The whole judgment of Bramwell B contains a usefully clear analysis of relevant parts of the law.)

62. It is the failure to see that this principle of reciprocity and mutual benefit provided the answer to many of the problematic cases, coupled, but not necessarily so, with the defence of consent. It is the introduction of such words as "ordinary" or "reasonable" into the judgments and dicta in marginal cases which have caused confusion in those cases, whereas if the established common law principles of the civil law of nuisance and the essentials of Blackburn J's statement of the rule (which I have identified in paragraph [54] above) had not been departed from the confusions could have been avoided.

A Further Confusion:

63. The main focus of unnecessary confusion has been the phrases "which was not naturally there" (Blackburn J) and "natural/non-natural user" (Cairns LC). What they were referring to was the creation or preservation of the dangerous user by bringing something dangerous onto the land or keeping it there. This was how Lord Porter read it in his speech in Read v J Lyons. It involves some positive use of the land by the landowner, created or continued by the landowner. Natural features of the land do not satisfy this criterion even if they constitute a danger to adjoining landowners, for example, rivers which are liable to flood. This does not involve an inquiry into the ever changing features of any landscape but should direct the focus onto what the occupier has himself done - what thing he has brought onto his land. Similarly, the presence of natural vegetation on the land, or the normal use of the land in the course of agriculture does not as such bring the rule into operation. Any risks involved, for example the spread of fire, are not ones which, without more, call for the imposition of any risk based liability; liability if any must be based upon some antecedent creation of risk or some subsequent fault (Goldman v Hargrave [1967] 1 AC 645). But, consistently with principle, there will not be a duty of care simply to protect one's neighbour from natural hazards; he must protect himself as he best thinks fit. Yet these simple criteria have been adapted in various cases and judgments so as to serve the purpose of the reciprocity/ consent principles. This was and is unnecessary and has created the confusion which would have been avoided if the formulation of Blackburn J had been adhered to.

Cambridge Water v Eastern Counties Leather:

64. Finally there is the principle recognised in the Cambridge Water case. The plaintiffs sued in respect of the pollution of their water supply which was traced back to a method of working used in the defendants' factory many years before which involved minor but repetitive spillages of a chemical. The trial judge held that the defendants had not been negligent and the plaintiffs had abandoned their case in nuisance, choosing to continue with a claim solely based upon Rylands v Fletcher. It was further held that at the time of the spillages it was not foreseen or foreseeable that such spillages would cause any harm to other landowners or their water supplies. Lord Goff who delivered the leading judgment drew upon the language of nuisance used by Blackburn J and the limitations of the scope of that tort recognised by the Privy Council in The Wagon Mound No. 2 [1967] 1 AC 617 and held that "foreseeability of harm of the relevant type by the defendants was a prerequisite for the recovery of damages in nuisance and under the rule in Rylands v Fletcher". Lord Goff saw this as a principle of the remoteness of damage (pp.301 and 304) but his reasoning is also consistent with it being part of the risk element in the tort. Thus he quotes at p.308 Lord Moulton's statement in Rickards v Lothian [1913] AC 263 at 280: "It is not every use to which land is put that brings into play that principle. It must be some special use bringing with it increased danger to others, and must not merely be the ordinary use of the land ....". Lord Goff also cites phrases of Blackburn J: "... the person who for his own purposes brings on his lands and collects and keeps there anything likely to do mischief if it escapes ...." and ".... who has brought something on his own property which was not naturally there, harmless to others so long as it is confined to his own property, but which he knows to be mischievous if it gets on his neighbour's ....." and ".... keep it there so that no mischief may accrue, or answer for the natural and anticipated consequences". (emphases supplied) It is thus the creation of a recognisable risk to other landowners which is an essential constituent of the tort and the liability of the defendant. But, once such a risk has been created, the liability for the foreseeable consequences of failure to control and confine it is strict.

65. Your Lordships' House therefore held in favour of the defendant Eastern Counties, Lord Goff commenting that the fact that their holding that there must be, for the establishment of liability in damages, foreseeability of harm of the relevant type should assist courts to avoid resorting to unsatisfactory arguments in their attempt to limit the scope of the strict liability. Rylands v Fletcher itself was declared still to be good law.

Conclusions:

66. I consider that the rule in Rylands v Fletcher should not be abrogated. The rationale for it was and remains valid. The content of the rule has been clearly spelled out by Blackburn J and the relevant constituent elements can be easily stated as I have done in paragraph [54] above. The academic and judicial criticisms of the rule are largely the result of later confusions. The rule itself and the laws of private nuisance already in existence in the mid-19th century and still in existence today provide appropriate defences or, to adopt the current jargon, sufficient control mechanisms.

67. In the decision of disputes there are always bound to be cases which fall just on one side of the line or the other. The present case is no exception. The source of the leakage was a water pipe large enough to supply the defendants' flats. The accumulation of ground water arose because of unforeseen and undetected leakage over a period of time; the leakage was fortuitous. The case cannot be brought within the principle of shared benefit or implied consent nor was any act of God or vis major involved. But the necessity remains that the plaintiffs must show that the defendants brought onto their land something dangerous which involved a risk of damaging the plaintiffs' property. Stored water might constitute such a danger as could a high pressure water main laid under a city street: Charing Cross Electricity Supply Co v Hydraulic Power Co [1914] 3 KB 772. But the present is not such a case. The water pipe which the defendants laid to supply the flats was not such a danger; it falls on the wrong side of the line. The plaintiffs' claim rightly failed.

68. Finally, I should mention the plaintiffs' prescriptive easement of support. This did provide them with a property interest but did not itself give them a right to recover the damages claimed. This is because of the very limited rights and remedies which the 'easement' entitles them to, an aspect of property law which lies outside the scope of this Opinion and does not presently call for comment.

69. I agree that the appeal should be dismissed.

LORD SCOTT OF FOSCOTE

My Lords,

70. In or around 1966 North West Gas Board laid a 16 inch high pressure gas main in and along a railway embankment then owned by the British Railways Board. The gas main was laid pursuant to a Deed of Grant dated 3 November 1966. Transco plc, the appellant before the House, is the successor of North West Gas Board. So the gas main is Transco's gas main. The railway embankment belongs now to the respondent, the Stockport Metropolitan Borough Council. It is accepted that, as between the two parties, Transco and its predecessors are, and have been at all times material to this litigation, entitled to maintain their gas pipe in the council's embankment and to the support of the gas pipe by the earth beneath it.

71. The council is the owner also of an 11 storey block of 66 flats, Hollow End Towers, not far from the embankment. The block of flats had already been built at the time when Transco's gas pipe was laid in the embankment. The water supply to the block of flats is carried from the water authority's mains via a 3 inch internal diameter asbestos cement pipe. This supply pipe is the council's pipe. Its maintenance is, therefore, the council's responsibility. It is not contended that the supply pipe was in any way unusual in its dimensions for the supply of water to an 11 storey block of 66 flats.

72. The land lying between the block of flats and the embankment, too, is owned by the council. The area had been used by the council in the 1950s for landfilling and has since been grassed over.

73. Further details about the locus in quo are contained in the opinion of my noble and learned friend Lord Hoffmann and I need not repeat them. The details of the fracture in the 3 inch water supply pipe, the consequent escape of water, first into the old landfill site and then on to the embankment, the resulting collapse of a part of the embankment, and the repair work carried out by Transco in order to re-instate the necessary support for and protection of its gas pipe are set out in my noble and learned friend's opinion and these details, too, I need not repeat.

74. The action commenced by Transco which has found its way to your Lordships' House is an action to recover the cost of the work Transco has carried out to the embankment. The claim is in the main based on the proposition that under the rule in Rylands v Fletcher (1868) LR 3 HL 330 the council is liable for the damage caused by the escape of water from its supply pipe whether or not the council was guilty of any lack of care. Indeed, it has never been contended that the fracture in the supply pipe was attributable to any lack of care on the part of the council. Transco's amended statement of claim did contain allegations against the council of negligence relating to the state of the drains and culverts under the old railway, contributing, it was said, to their inability to carry away the volume of water escaping from the fracture, but the trial judge found against Transco on this issue. The case comes before your Lordships' House, therefore, on the footing that the escape of water from the fractured pipe, the damage the water caused to the embankment and the need for the work to the embankment to be carried out in order to re-instate the support for Transco's gas pipe were not attributable to any negligence on the part of the council.

75. The classical exposition of the Rylands v Fletcher rule is to be found in the judgment of Blackburn J in the Exchequer Chamber (1866) LR1 Exch 265, 279:

"We think that the true rule of law is, that the person who for his own purposes brings on his lands and collects and keeps there anything likely to do mischief if it escapes, must keep it in at his peril, and, if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape."

The concept of "escape" underlies also the following passage, at p 280:

" it seems but reasonable and just that the neighbour, who has brought something on his own property which was not naturally there, harmless to others so long as it is confined to his own property, but which he knows to be mischievous if it gets on his neighbour's, should be obliged to make good the damage which ensues if he does not succeed in confining it to his own property."

The speeches in this House of Lord Cairns and Lord Cranworth similarly express the principle as being applicable to cases where something or other, potentially dangerous, that the defendant has brought onto his land has escaped onto the plaintiff's land and there caused damage (see LR 3 HL 330, 339, 340).